NUKE OWNERS SEEK $768.5M FROM CUSTOMERS

Owners of the San Onofre nuclear plant want to collect $768.5 million from Southern California utility customers to pay for a steam generator replacement project that went awry, in an application that adds up the expenses for the first time.

Responding to an order of the California Public Utilities Commission, plant operator Southern California Edison submitted its application for cost recovery Friday evening, though it and minority plant owner San Diego Gas & Electric already have been billing customers on a provisional basis for the generators.

The plant’s four new steam generators went online in 2010 and 2011. A small radiation leak shut down the plant Jan. 31, 2012, and led to the discovery of rapid wear on generator tubing that serves as a barrier to radioactive water circulating through the reactor cores.

Edison said adjustments for inflation show the project came in under a $680 million cap, when translated into 2004-dollar terms, allowing state regulators to forgo a review of whether the expenses were fair and necessary. Those calculations, under an index tailored to public utility construction projects, have sparked criticism from consumer advocates for distorting the project costs.

The commission also reserved the right to review any cost at any level, in its 2005 authorization.

“If the steam generator replacement project cost exceeds $680 million, or the commission later finds that it has reason to believe the costs may be unreasonable regardless of the amount,” the original order stated, “the entire (project) cost shall be subject to a reasonableness review.”

Edison is attempting to collect insurance and generator warranty claims, as it seeks permission from federal safety regulators to restart one of two San Onofre reactors at partial power.

A final accounting for the generator project has come due amid revelations by generator manufacturer Mitsubishi Heavy Industries that it and Edison identified design shortcomings in the generators but decided against some changes in part to escape a lengthier regulatory review.

Edison has traced the most troubling wear in the generators to faulty computer modeling of steam flows in the design phase, with more extensive damage in Unit 3 blamed on additional factors.

The Nuclear Regulatory Commission also is investigating whether Edison has provided complete and accurate information about the generators.

The cause of damage to the generators can eventually be considered in determining whether it is reasonable to bill customers for the entire project. But that discussion has been put off until next year or later as the commission first focuses its investigation into possible customer refunds on expenses at the outset of the outage in 2012.

“The reason there was not a reasonableness review is because the application had not been filed,” said attorney Michael Aguirre, who represents San Diego ratepayers, and has urged the commission to review the costs sooner. “Now the application has been filed, and the PUC is postponing.”

The steam generators make up an outsize portion of Edison’s annual return from San Onofre: $43 million in 2012.

Beyond the generators, Edison earned a $53 million return last year based on the depreciated value of the 3-decade-old nuclear facility.

In all, Edison billed its customers $118 million last year for the steam generator project and is scheduled to collect an additional $130 million this year.

SDG&E owns one-fifth of the plant, with its customers bearing the same proportion of plant and new equipment costs.

Edison spent about $1.09 billion last year at the plant. It has shouldered the roughly $400 million cost of repairs, inspections and replacement power linked to the outage — but will also seek to pass those costs on to customers.